Distributed Energy Resources Market Diffusion Model

Distributed generation (DG) technologies, such as gas-fired reciprocating engines and microturbines, have been found to be economically beneficial in meeting commercial-sector electrical, heating, and cooling loads. Even though the electric-only efficiency of DG is lower than that offered by traditional central stations, combined heat and power (CHP) applications using recovered heat can make the overall system energy efficiency of distributed energy resources (DER) greater. From a policy perspective, however, it would be useful to have good estimates of penetration rates of DER under various economic and regulatory scenarios. In order to examine the extent to which DER systems may be adopted at a national level, we model the diffusion of DER in the US commercial building sector under different technical research and technology outreach scenarios. In this context, technology market diffusion is assumed to depend on the system's economic attractiveness and the developer's knowledge about the technology. The latter can be spread both by word-of-mouth and by public outreach programmes. To account for regional differences in energy markets and climates, as well as the economic potential for different building types, optimal DER systems are found for several building types and regions. Technology diffusion is then predicted via two scenarios: a baseline scenario and a programme scenario, in which more research improves DER performance and stronger technology outreach programmes increase DER knowledge. The results depict a large and diverse market where both optimal installed capacity and profitability vary significantly across regions and building types. According to the technology diffusion model, the West region will take the lead in DER installations mainly due to high electricity prices, followed by a later adoption in the Northeast and Midwest regions. Since the DER market is in an early stage, both technology research and outreach programs have the potential to increase DER adoption, and thus, shift building energy consumption to a more efficient alternative.